Dilapidations: rulings on landlords' obligations

12 June 2017

The nuances of landlords’ obligations on repair obligations proved crucial in two recent dilapidations rulings, as Emma Humphreys details

It has been a while since a dilapidations case has headed to appeal, but last year saw one considered by the Court of Appeal and another by the Supreme Court.

In South Essex Partnership University NHS Foundation Trust v Laindon Holdings Limited [2016] EWCA Civ 377, a mixture of re-used and new carpet tiles had been laid during the tenant’s fit-out works. Shortly before the tenancy terminated, the tenant replaced these with strips of broadloom carpet of the same specification at a cost to itself of £38,234.

A question of alteration

The subsequent dilapidations claim made by the landlord included £41,445 for carpets. It alleged that the recarpeting carried out by the tenant had failed to comply with its obligation 'to repair or replace from time to time the Landlord’s fixtures and fittings in the Premises as may be or become necessary'.

The tenant argued that the tiled carpets were either its own fixtures, because it had paid for their installation or else that, if they were landlord’s fixtures, their replacement by a broadloom carpeting system was an 'internal non-structural' alteration permitted by the lease.

The Court of Appeal upheld the finding that the original carpet tiles constituted landlord’s 'fixtures and fittings' despite the tenant’s payment for their installation. However, it found that the tenant’s right to make alterations was sufficiently unqualified to extend to allowing replacement of the tiled carpets, whether they were landlord’s fixtures or 'fittings', that is, chattels. Since the landlord had failed to require reinstatement of the alteration and the carpet was in repair at the end of the tenancy, the claim for its replacement was rejected.

The landlord’s loss of rent claim was also dismissed in respect of the void period that it had allowed for undertaking the works once a new tenant was found. The decision to delay starting work was found to be a commercial decision by the landlord rather than an issue arising from the tenant’s breach.

However, the court did not interfere with the High Court’s decision to assess the costs of the repair works at the trial date rather than at the tenancy expiry – based on the landlord’s delay in starting work and following the principles in Dodd Properties v Canterbury City Council [1980] 1 WLR 433 – because there was no appeal on this point by the tenant.

Implied repair

There was a better outcome for the landlord in Edwards v Kumarasamy [2016] UKSC 40, where the Supreme Court considered the implied repairing obligations under section 11 of the Landlord and Tenant Act 1985.

Kumarasamy sublet his flat to Edwards on an assured shorthold tenancy, granting him a right to use 'any shared rights of access, stairways, communal parts, paths and drives' of the building. It was agreed that section 11 applied to the tenancy, which implies certain repair obligations in leases of dwellinghouses granted for a term of less than seven years. These include an obligation on landlords 'to keep in repair the structure and exterior of any part of the building in which [he] has an estate or interest'.

After tripping on an uneven paving stone, Edwards brought a claim against Kumarasamy, alleging that the failure to keep the paved area in repair breached section 11 of the act. Edwards succeeded in obtaining damages of £3,750 at the first instance, but this was overturned on appeal and the matter eventually ended up before the Supreme Court.

The court decided that the paved area from the front door of the building to the car park did not constitute part of the building’s “structure and exterior” for the purposes of section 11. It emphasised that words must be given their ordinary meaning unless this produces a nonsensical result or a result inconsistent with the intention of the legislation.

Since the paved area was not within the ambit of section 11, Kumarasamy had not breached his obligations and the appeal failed. The Supreme Court nonetheless considered the question of whether notice of disrepair is required by section 11 and found that it is not always required. However, the court felt it would have been needed from Edwards – not least because he was in a far better position than Kumarasamy to know of any disrepair. This should be a relief to buy-to-let landlords, as well as a reminder of the benefits of expressly requiring a tenant to give notice of disrepair.

Emma Humphreys is a partner at Charles Russell Speechlys LLP

Further information

This feature is taken from the RICS Building surveying journal (May/June 2017)